Management
In complex systems or “wholes,” we need to
learn to anticipate as many of the effects as
possible before making changes in any part.
Good decisions in areas like grazing management
and animal breeding can initiate a cascade of
good events that will compound well into the
future. Bad decisions can do just the opposite.
In managing our farms and ranches, we must
manage four areas: production; economics/
finance; marketing and; people. Each of these
can be divided into sub-areas; but all interact
and become part of the same “whole” or
system which is our ranching business.
In reality, the whole of our ranching business
extends to our community and business and
social relationships. Managing people is not
so much about being a good “boss.” It’s more
about building and managing relationships
both inside and outside of the business
that will improve our profitability, enhance
our reputation, help us gather managerial
information, and allow us to contribute to
the community and create friendships.
As Dave Pratt has so often pointed out, there
are three ways to improve profit: increase
turnover, reduce overheads and improve gross
margin. Everything you will propose for profit
improvement will fit under one or more of these.
If you do something that will increase turnover
and improve gross margin, it may also require an
increase in overheads; so be careful in your analysis.
You can’t just look at one and ignore the others.
For as long as I have written this column, I have
talked about “Five Essentials for Successful Ranch
Management.” These are attitudes and processes
for “managing the whole” to improve profitability
along with resource health and productivity:
36 | MAY 2019
1. Our approach to management must
be both integrative and holistic.
2. Always strive for continuous
improvement of the key resources—
land, livestock and people.
3. Acquire and use good tools for
analysis and decision making.
4. We must wage war on cost.
5. We should place an emphasis on marketing.
If you and your team can get good at each of
these “essentials,” you will be profitable unless
you begin with an impossible debt load. In which
case, you must first take care of the debt.
• There are several major
determinants of profit:
• Enterprise mix and choice
• Overheads (people, their tools and
equipment plus land and things attached
to it—buildings, facilities, etc.)
• Stocking rate
• Cow size and milking ability
• Grazing management to improve soil health
• Fed feed vs. grazed feed
• Calving season
• Realized herd fertility—conception
and subsequent survivability
• Wise input use for optimum production.
Be careful. Optimum is always less than
maximum—sometimes considerably less.
• Marketing